30148 - MANAGEMENT OF FINANCIAL INSTITUTIONS
Course taught in English
The world of financial institutions has changed dramatically since the 2008-09 global financial crisis, when many large financial firms around the world failed and were bailed out by their central government. The Covid pandemic has recently posed new challenges to economies and financial systems globally. The regulatory framework has changed accordingly, to provide stricter responses and make financial institutions more resilient. In light of these changes, the course focuses on main managerial issues faced by banks and insurance companies over the last decade. They include funding and investment strategies as well as risk management and performance measurement. These are examined in light of the most relevant and recent regulation, that have been affecting deeply the way banks and insurance run their business.
The analysis is carried out along the following streams:
- The banking industry today: players, strategies, and regulation.
- Liabilities management and credit policy in banking: financial instruments and business practices.
- Banking business and Risk management. Focus on credit risk and the NPL issue in the pre and post Covid pandemic.
- Financial statement analysis and performance measures in banking.
- The insurance industry today: players, strategies and regulation.
- Insurance process and insurance premiums.
- Risk and capital management for insurers.
- Financial statement analysis and performance measures in insurance.
- Describe the characteristics of the banking and insurance business (what do banks and insurance companies do? which is their core business? which are the main funding and investment instruments issues by banks?).
- Identify the main drivers of banks' funding, credit, and investment decision.
- Recognize main risk typologies and how these risk are measured and managed.
- Explain which are the main set of rules applying in banking and insurance.
- Explain how the regulatory framework affect insurance companies and banks behavior.
- Assess and interpret facts in the real world in light of what they have learned during the course.
- Comment on banks’ and insurance companies’ behavior and identify main drivers of their performance (e.g., what does explain European banks’ low profit?).
- Assess and measure banks’ and insurance companies’ performance (e.g. banks’ profitability, liquidity, asset quality, capitalization).
- Identify and measure main source of risks for banks (e.g., amount of exposure to interest rate risks).
- Comment on benefits and flaws of regulation as well as hypothesize main potential effects of new set of rules.
- Face-to-face lectures
- Guest speaker's talks (in class or in distance)
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
Formal face-to-face lectures are complemented by guest speakers' talks from the industry (e.g. bankers and regulators). The idea is to gain focus on specific and up-to-date topics (example of hot topics in banks are: the introduction of a new resolution procedure within the European banking union and the Non-performing loans issues in the European banking industry). In the same spirit, to stimulate the debate, lectures are structured based on empirical evidence and incidents, stylized facts are presented and commented in class, practical examples of instruments and techniques are proposed. Consistently traditional material (e.g. textbook/ebook and slides) are complemented and empowered by empirical academic papers, institutional analyses (e.g. banking authorities and analysts' reports), relevant newspaper articles (e.g. FT columns), exercises in excel.
|Continuous assessment||Partial exams||General exam|
Students are asked to take an individual written exam (two partial exams or one general exam, at their choice).
The written exam consists of multiple choice questions and exercises aimed to gauge students’ ability to recognize different aspects of banks’ and insurance companies activity, e.g., the specificities of their business models, the drivers of banks’ funding and investment strategies, the main sources of risks, and how these risks are measured and managed. Multiple choice questions are structured in a way to enable the assessment of multiple skills: qualitative and critical abilities (e.g., by selecting the option that better reflects bank regulators’ view point on a given matter) as well as quantitative skills (e.g., by measuring banks’ exposure to certain risks).
There are no differences, as for the exam policy, between attending and non attending students.
- Management of Financial Institutions (cod. 30148) textbook. The hard copy is available at Egea Bookshop. The ebook is available at https://create.mheducation.com/shop/#/catalog/details/?isbn=9781307464986
- Additional material (readings, slides and teaching notes), available in Bboard.
- The final and updated version of the required material are communicated in class and posted in Bboard.